12/30/2009 @ 6:00AM

What Apple, Cisco And Google Share

Why did some tech companies soar during the past decade, 2000 through 2009, while others floundered? The winners–
Apple
,
Google
and
Salesforce.com
, for instance–had the foresight to invent new, profitable sectors (digital media devices and services, Internet advertising, software-as-a-service). The less fortunate–AOL,
Dell
and Sun, for instance–got distracted or guessed wrong on major trends.

Here’s our take on the decade’s winners and losers in technology.

The Winners:

Apple

It’s easy to fawn over Apple. Let’s not. Apple’s products aren’t cheap. Its employees are secretive about upcoming products. And Apple has done a terrible job of communicating the health status of rock star Chief Executive Steve Jobs, who took a mysterious six-month leave of absence last January only to resurface with a liver transplant in June. None of that, however, really matters. Over the past 10 years Apple’s stock has risen more than 650%. Its employee head count rose to 32,000 last year from 8,568 in September of 2000. Apple routinely tops the PC category of the American Customer Satisfaction Index. Finally, Jobs’ absence proved he has built a team that can deliver good results–if not detailed updates about his health. –Brian Caulfield

Cisco

No company had been tied to the fortunes of the Internet business more closely than Cisco. That meant an enormous crash for the networking equipment firm in the dot-com bust at the beginning of the decade. But when the Internet turned out not to be a fad (surprise, surprise), Cisco and its consummate salesman of a CEO, John Chambers, were ready to ship business and Internet service providers truckloads of high-margin routers and switches. Cisco has since become one of the most acquisitive companies in tech, buying into every Internet-related area from cybersecurity to set-top boxes to videoconferencing. –Andy Greenberg

First Solar

Every solar company on the planet yearns to be as successful as First Solar has been. Founded in 1999 and initially funded by members of the Walton family (principal shareholders of retailer
Wal-Mart
), First Solar makes what are called “thin-film” solar panels that use microscopic layers of a compound called cadmium telluride instead of the more traditional crystalline silicon. It has benefited from government feed-in tariffs that support solar energy use in countries such as Germany, Italy and Spain. Shares are off 55% from their peak in May 2008, but the company still sports an impressive $11.5 billion market capitalization on revenues of $1.9 billion. –Kerry A. Dolan

Google

In its first full calendar decade, Google came from nearly nowhere to domination of the search advertising industry. That was the start–acquisitions like YouTube, Android and DoubleClick have taken the company into online video, mobile phones and banner advertising. Google’s suite of office applications have, in three years, generated annual sales of over $500 million, and offer a collaborative working style that may transform the way corporations work. --Quentin Hardy

Hewlett-Packard

Considering all the tumult around this company, it is worth remembering that at the beginning of the decade HP was Silicon Valley’s giant also-ran. Today it is the world’s largest tech company, with $118 billion in annual sales. Chief Executive Carly Fiorina’s stormy tenure–which included awkward public battles with the founders’ kids and an embarrassing corporate spying scandal–severed HP from a storied and stifling past, and through the acquisition of Compaq, made it a leader in personal computers. Successor Mark Hurd, with the operational chops Fiorina lacked, has made HP a contender in data center software, consulting and industrial printing. –Quentin Hardy

Oracle

A decade ago, Oracle was known as a “relational database” software maker. Fast-forward to 2009: Larry Ellison’s company is acquiring
Sun Microsystems
and plans to recreate itself as a “systems” company to go after its No. 1 competitor,
IBM
. –Wendy Tanaka

Research In Motion

RIM’s BlackBerrys may not be the newest, hottest phones on the market, but they keep selling. In its last financial quarter, the world’s No. 2 smart phone supplier shipped a record 10.1 million BlackBerrys and announced higher than expected revenue, earnings and subscriber growth. (In the smart phone market, only
Nokia
is larger and it has been struggling.) In 2010, RIM expects to grow even faster. About 36 million people currently use BlackBerrys in 170 countries around the world, including–at long last–China. Not bad for a phone that began the decade as a lowly two-way pager. –Elizabeth Woyke

Salesforce.com

A decade ago Marc Benioff founded Salesforce.com with a novel idea he dubbed “the end of software.” Many in the industry thought he was too early, or just plain wrong. Benioff insisted software was going to the Web and would be purchased not in package deals with servers but as a service. His pitch came just as the dot-com bubble burst, yet Salesforce grew impressively. The company went public in June 2004. This year revenues increased 24%, to $1.24 billion. Operating profits have more than kept pace, jumping 81% to $105 million. –Victoria Barret

The Losers:

AOL

America Online was a dot-com era darling. It was ahead of the curve, offering one of the first e-mail services. But AOL’s fortunes started heading south in 2000 when it acquired media giant
Time Warner
–a deal now considered one of the worst in corporate history. A host of problems, including a culture clash between the two companies, a faulty business plan and an accounting scandal, led to the merger’s failure and nearly destroyed AOL. In December, AOL split from Time Warner and is now trying to reinvent itself as a portal for Web content under the leadership of former Google sales chief Tim Armstrong. –Wendy Tanaka

Ariba
and Commerce One

Today, many people don’t know their names, but at the height of the dot-com bubble, they were nearly as big as Google. While Pets.com is usually the poster child for dot-com excess, Ariba and Commerce One better deserve the reputation. The two Silicon Valley companies were going to use the Internet to change the way businesses buy and sell from each other. They provided “B2B” software and exchanges, and before everything crashed, had a combined market cap of more than $60 billion. A scaled-down Ariba is still around; Commerce One has long since been gobbled up. –Lee Gomes

Dell

Dell is an example of how quickly a company can go from great to merely good. Much of the blame lies on Dell’s past success. A decade ago, the PC maker was way ahead of the shift to low-cost, commodity-based computing for the masses. Then, the world began to catch up. Mark Hurd made HP’s acquisition of Compaq work, giving Dell a rival with real scale in the business of supplying PCs and affordable servers to businesses. Apple’s flair for design, meanwhile, whittled away consumers with money to spend. Finally, a shift to notebook computers from desktop PCs has hurt Dell where it has always done well. The result: Dell’s shares have fallen roughly 70% over the past 10 years. –Brian Caulfield

Enron

The sheer scale of the accounting fraud that went on at this former Houston energy trading company secured it an ignominious place in corporate history. Enron began by transmitting and distributing electricity and natural gas, but later expanded into trading a vast number of products, including broadband and streaming media. Enron reported revenues of $101 billion in 2000. But in 2001, evidence of fraud emerged and the company filed for bankruptcy in late 2001. Former Enron CEO Ken Lay was found guilty of fraud in May 2006 but died of an apparent heart attack a few months later, before he was sentenced. –Kerry A. Dolan

Nortel

Nortel began the decade with a market cap of more than $300 billion. Today, it is in liquidation with its assets divided among former rivals
Ericsson
and
Avaya
. Analysts say the Toronto-based telecom company, once North America’s largest phone-equipment maker, offered a mish-mash of services and got stuck peddling second-generation wireless standards when its customers wanted faster, third-generation technology. A 2005 turnaround attempt under a chief executive poached from
Motorola
didn’t pan out. Meanwhile, competitors like Cisco have thrived. –Elizabeth Woyke

Pets.com/Webvan

Just uttering the names of these dot-com flame-outs sent shivers up the spines of entrepreneurs and venture capitalists. They exemplified the giddy excesses of 1990s Silicon Valley and lost hundreds of millions in investor money. Simply put, neither company–an online pet supplies retailer and a grocery delivery service–had a realistic business plan. But back then, any Internet-focused business got an automatic thumbs-up from investors and Wall Street. –Wendy Tanaka

Sun

It was supposed to become a great computer company, to rival IBM. Sun, though, ended up being on the wrong side of all the decade’s crucial tech trends. Moore’s Law was making
Intel
chips the fastest on the planet, but Sun stuck to its own in-house hardware. And the combination of
Microsoft’s
Windows and the open source movement’s Linux eliminated whatever technical advantages were enjoyed by Sun’s own Solaris operating system. After years of losses, Sun was bought by Oracle; it’s unclear what of the company will survive. –Lee Gomes